How much will it cost? Calculate your home loan repayments

Some likely and not-so-likely housing affordability fixes

When it comes to addressing housing affordability, there are some zany ideas out there.

Erstwhile Labor Party leader and current lightning rod for controversy/attention Mark Latham recently suggested that the best way to tackle Australia’s housing affordability problem would be to shut down immigration. Speaking at a Sydney event titled “Housing Affordability: An Honest Debate” and hosted by Sustainable Australia, Latham argued that population growth was driving up house prices.

“You don’t need to be John Maynard Keynes to work out that if you lower the demand for housing by cutting the immigration program, you do something to stabilise the price of housing or even bring it down,” he said.

While we won’t enter into the debate on Latham’s idea, we will venture out on a limb to say it’s unlikely to get much traction with politicians from either major party. But Mark Latham isn’t alone in proposing outside-the-square solutions to Australia’s housing affordability problems. We’ve compiled a few of the proposals on offer and discussed the likelihood that we’ll ever see them come to pass.

A note about scoring

We’ve rated each idea on a sliding scale of 0 to 10 Lathams. Much like golf, a lower score here is desirable. 0 Lathams means a proposal is 100% certain to be put into practice. 10 Lathams means you’re as likely to see it happen as you are to see Mark Latham become Prime Minister with Kevin Rudd as his chummy Deputy.

Shared equity

Shared equity is an arrangement in which a government or community organisation helps homebuyers get into the property market by taking on partial ownership of their house. Over time, the homebuyer can buy back the organisation’s share until they achieve full ownership. This strategy has been implemented in the UK under a model known as staircasing.

There seems to be some popular support for the idea. Treasurer Scott Morrison expressed fondness for the UK model, while NSW Planning and Housing Minister Anthony Roberts recently told the Sydney Morning Herald that the state government could look into shared equity models. Moreover, South Australia already has a shared equity program known as HomeStart and a University of Adelaide study found that suburbs with shared equity schemes have an 8% higher rate of homeownership.

This idea seems not only feasible, but like one that is gaining some support. That’s why we rate it a very likely 2.5 Lathams.

2.5 Lathams

Killing negative gearing and/or CGT breaks

Negative gearing and capital gains tax (CGT) concessions became a huge issue at the last Federal Election, with the Labor Party promising to limit the tax concessions to newly-constructed properties and the Liberal Party vowing to leave it unchanged. When the Liberals retained government, it seemed unlikely that negative gearing or CGT would change.

The idea behind axing the tax concessions, or limiting them to newly-built properties, is to discourage speculative investment in property, thus eliminating a potential source of competition for first home buyers. Even proponents of the plan admit that it would only bring house prices down by a marginal amount.

Talk of negative gearing or CGT changes aren’t dead and buried. Liberal backbencher John Alexander recently told Sky News there were members of the party who were promoting CGT changes as a possible fix for housing affordability. Moreover, NSW Planning Minister Rob Stokes argued that negative gearing and CGT changes should be on the table when discussing affordability.

Still, Treasurer Scott Morrison has been steadfast in his refusal to consider changing the current arrangements. While changes could come eventually, it will probably take a change of government. We give this one 6 Lathams.

6 Lathams

Streamlining planning

Most property developers argue that the barrier holding back affordability is supply and the barrier holding back supply is the planning process. Developers argue that land release takes too long, development applications are too restrictive, taxes on developers are too high and that there’s a general abundance of red tape.

Cutting the red tape of the planning process seems to be chief among the government’s housing affordability plans. The NSW Government has already taken steps that it claims will streamline development, with the release of a new guide for councils. Seeing as this is already underway, we give it a near-certainty rating of 1 Latham.

1 Latham

Super for housing deposits

The idea of dipping into superannuation for housing deposits has been kicked around for quite a while. The proposal has come back to the forefront, with Assistant Treasurer Michael Sukkar refusing to rule it out.

While dipping into a large pool of available funds for a housing deposit seems enticing, the proposal has drawn some scathing criticism. Chief among the critics is former Prime Minister Paul Keating, who called the idea “irresponsible” and said that allowing young Australians to access their super now would “rob them” of their retirement savings later in life. Financial Services Council chief executive Sally Loane went so far as to predict that the plan would actually drive house prices up.

The idea definitely appears to be on the table for the government. However, it would require a bold structural change, something that neither side has been too keen on in recent times. Whether or not the idea is actually wise, it seems likely to be placed in the too-hard basket. We give this one 7 Lathams.

7 Lathams

Eliminating stamp duty

There is nothing the housing industry would like to see more than the abolition of stamp duty. The tax can run into the tens of thousands of dollars for homebuyers and the Housing Industry Association claims it costs buyers an extra $100 a month for the term of their home loan. Instead, they would like to see a broad-based land tax.

The move certainly has its detractors. Curtin University’s Steven Rowley recently told Domain that a land tax could actually hurt first home buyers. With first home buyers often eligible for stamp duty concessions, levelling the playing field by removing stamp duty altogether could mean cashed up investors would have even more cash with which to outbid first time buyers, Rowley argued.

States rely on stamp duty for a significant proportion of their revenue and state governments have long opposed efforts to abolish the levy. A plan to axe stamp duty put forward by the Greens was recently costed by the Parliamentary Budget Office and the governments of Queensland and WA have expressed opposition to the plan, according to the ABC. While Treasurer Scott Morrison wouldn’t comment one way or the other on the future of stamp duty, it seems unlikely that the Federal Government would risk such a rift between the states. We give this one 8.5 Lathams.

8.5 Lathams

Hyperloop

Ah, the hyperloop. The Elon Musk-touted, high-speed mass transit of the future. Picture the tube system from Futurama. This hypothetical hyperloop system would be composed of a vacuum-sealed tube along which passenger cabins would travel, whisked along by linear conduction motors at speeds approaching the sound barrier.

The idea behind the hyperloop, or even a Very Fast Train (VFT) network, is to connect Australia’s capitals to more far-flung regional areas, thus allowing workers to commute longer distances in a shorter amount of time. By widening the geographical area in which people can feasibly commute to their jobs, the available housing supply would be massively increased and affordable housing would be far more accessible.

Of course, critics of the plan argue that the cost of constructing such a system would be prohibitive, that it could be susceptible to damage from seismic activity, human error or terror attacks and that people might just not enjoy sealing themselves inside a windowless steel tube and being shot down a juttering track at the speed of sound.

The idea of high-speed rail has been touted for years, but seems no closer to reality. While Liberal backbencher John Alexander has been a vocal proponent and Prime Minister Malcolm Turnbull expressed some vague support, actually seeing a VFT or hyperloop system constructed doesn’t seem likely. We’ll give this one 9 Lathams.

9 Lathams

Decentralisation

Australia has one of the highest urbanisation rates in the world, with nearly 90% of the country’s population living in large metro areas. By contrast, Australia also has one of the largest landmasses of any country in the world. That’s a lot of space not being utilised by many people.

This dichotomy hasn’t escaped Nationals leader Barnaby Joyce, who’s called for a decentralisation of Australia’s population. Joyce argued that young Australians should take a chance and head out to regional areas to seek their fortunes. He’s even moved three government research organisations out of Canberra and into regional areas such as Toowoomba, Dubbo and Wagga Wagga. By decentralising the population, Joyce argues that young Australians will have much better access to affordable housing.

There is support for Joyce’s idea. Treasurer Scott Morrison recently hinted that the budget could offer measures to incentivise moves to regional areas.

“For young people who are thinking, ‘can I buy a house in Sydney or can I buy a house in Melbourne or Brisbane?’ or things like that, there is an option if people want to take up in places like Tamworth,” Morrison told Ray Hadley on 2GB.

This seems to indicate that the government will take action to follow Joyce’s decentralisation plan. Whether or not young Australians will cooperate when the government tells them to move to Wagga Wagga is yet to be seen. Because the success of this idea relies on willing participants, we’ll give it 5.5 Lathams.

5.5 Lathams

Annexing New Zealand

The Land of the Long White Cloud is a good neighbour to Australia and citizens of both countries transit back and forth fairly often looking for work or lifestyle opportunities. Combining into one super country of shared cultural values could provide new economic opportunities for both countries, as well as a new supply of housing for both populations.

The idea isn’t as outlandish as it may seem. In a 2015 op-ed for the Sydney Morning Herald, ad guru Harold Mitchell proposed the merger as the best economic way forward for both countries. But New Zealand certainly doesn’t provide a panacea to Australia’s housing woes. Real estate in the country is severely unaffordable, with Auckland ranking only two places behind Sydney as fourth place on Demographia’s list of the world’s least affordable housing markets.

Adding to the difficulty is the fact that Australians and Kiwis aren’t particularly keen on joining forces. A 2012 poll found that only 35% of Australians thought merging would be good for both countries, while only 24% of Kiwis expressed support for the idea. That gives this proposal a perfect score of 10 Lathams. Although, joining forces with the Kiwis might be the only way that Australia will ever get the Bledisloe Cup back.

Ask an Expert

Do not enter personal information (eg. surname, phone number, bank
details) as your question will be made public

finder.com.au is a financial comparison and information service, not a bank or
product provider

We cannot provide you with personal advice or recommendations

Your answer might already be waiting – check previous questions
below to see if yours has already been asked

Your Question

Subscribe to the Finder newsletter for the latest money tips and tricks

Notify me via email when there is a reply

Finder only provides general advice and factual information, so consider your own circumstances, read the PDS or seek advice before you decide to act on our content. By submitting a question, you're accepting our Terms and Conditions and Privacy Policy.

Get exclusive money‑saving offers and guides

Disclaimer -
Hive Empire Pty Ltd (trading as finder.com.au, ABN: 18 118 785 121) provides factual information, general advice and services on financial products as a Corporate Authorised Representative (432664) of Advice Evolution Pty Ltd AFSL 342880. Please refer to our FSG - Financial Products. We also provide general advice on credit products under our own Credit Licence ACL 385509. Please refer to our Credit Guide for more information. We can also provide you with general advice and factual information on about a range of other products, services and providers. We are also a Corporate Authorised Representative of Countrywide Tolstrup Financial Services Group Pty Ltd. ABN 51 586 953 292 AFSL 244436 for the provision of general insurance products. Please refer to our FSG - General Insurance. We hope that the information and general advice we can provide will help you make a more informed decision. We are not owned by any Bank or Insurer and we are not a product issuer or a credit provider. Although we cover a wide range of products, providers and services we don't cover every product, provider or service available in the market so there may be other options available to you. We also don't recommend specific products, services or providers. If you decide to apply for a product or service through our website you will be dealing directly with the provider of that product or service and not with us.
We endeavour to ensure that the information on this site is current and accurate but you should confirm any information with the product or service provider and read the information they can provide. If you are unsure you should get independent advice before you apply for any product or commit to any plan. (c) 2017.

Important information about this website

finder.com.au is one of Australia's leading comparison websites. We compare from a wide set of major banks, insurers and product issuers.

finder.com.au has access to track details from the product issuers listed on our sites. Although we provide information on the products offered by a wide range of issuers, we don't cover every available product. You should consider whether the products featured on our site are appropriate for your needs and seek independent advice if you have any questions.

The identification of a group of products, as 'Top' or 'Best' is a reflection of user preferences based on current website data. On a regular basis, analytics drive the creation of a list of popular products. Where these products are grouped, they appear in no particular order.

Where our site links to particular products or displays 'Go to site' buttons, we may receive a commission, referral fee or payment.

We try to take an open and transparent approach and provide a broad based comparison service. However, you should be aware that while we are an independently owned service, our comparison service does not include all providers or all products available in the market.

Some product issuers may provide products or offer services through multiple brands, associated companies or different labelling arrangements. This can make it difficult for consumers to compare alternatives or identify the companies behind the products. However, we aim to provide information to enable consumers to understand these issues.

Providing or obtaining an estimated insurance quote through us does not guarantee you can get the insurance. Acceptance by insurance companies is based on things like occupation, health and lifestyle. By providing you with the ability to apply for a credit card or loan we are not guaranteeing that your application will be approved. Your application for credit products is subject to the Provider's terms and conditions as well as their application and lending criteria.

Please read our website terms of use for more information about our services and our approach to privacy.